Duprey says HCU was involved in "risky" business

Business magnate Lawrence Duprey says he abandoned a $200 million deal to help the Hindu Credit Union (HCU) because it was too risky. He said he was unable to see any way to stop the financial crisis.

In an interview with the Trinidad Express Duprey acknowledged that HCU President Harry Harinarine had raised the profile of the organization, taking it from a small obscure credit union to a financial powerhouse with more than 186,000 members and $1.1 billion in assets.

When Harinarine took charge of the HCU in 1997 there were only 400 members and the assets were $5 million.

Harinarine developed an aggressive business plan for the HCU while he continued to work for Duprey's insurance company, CLICO.

Harinarine's trouble began as far back as 2004 when there was a run on the financial organization. He says it was because of negative publicity indicating that his business was heading into stormy waters. It was after that crisis that the CL Financial group discussed a business proposal with HCU.

Duprey said former CLICO chief executive Claudius Dacon approached him with a proposal to bail out the HCU.

The CL Financial chief said he wanted to help because "The Hindu community represents many of our biggest customers...We wanted to help the depositors."

A deal was signed on May 3, 2005 but Duprey said it soon became clear that it would not work.

"We looked at the transactions and we didn't see a way to stop the leakage. Every time we plugged a hole, another ten opened up...We knew people were going to lose their money."

The Express said minutes of a meeting between Duprey, Dacon and Harnarine on March 3, 2005, detailed matters discussed to identify a way forward for the deal. They included:

• purchase of property at Freeport, known as Savitur, for $34 million
• securisation of various HCU properties for $43 million
• confirmation of sales to Clico of properties at Chadee Lowhar Trace, Cunupia, and 253 acres of land at Penal Rock Road
• the sale of the mortgage portfolio in the amount of $30 million to Colonial Life Society Building &Loan Ltd
• sale of two-thirds of HCU subsidiary HCU Money Express and the sum of $100 million to be invested in the HCU Financial Group

Harnarine claimed that the deal soured because CLICO only offered $160 million in insurance premiums to members, not the $200 million promised.

He told the Express Duprey apparently didn't know about the transaction because in 2005, the HCU was comfortable paying off depositors.

"At no time was the deal to plug any hole," he told the Express. Harnarine said the plan was for a strategic alliance between the two organizations. He said Duprey should have reexamined the deal.

He said the initial valuations on HCU properties were flawed and had to be redone. And he noted that CL Financial did benefit from the deal since it acquired several properties in Central Trinidad that belonged to the HCU.